At RealHR Solutions, we have many clients that ask about HR Assessments, unsure what they need or where to start. We generally begin by framing our discussion explaining the What, Why, When, and Who for them to develop an understanding of the essentials. From there, we discuss the reasons for, the resources available, and the commitment to the HR Assessment and its results.

To help any organization looking for guidance on these critical HR analyses, we have compiled the fundamentals into a quick guide covering these topics:

• HR Assessment Basics
• 15 Key HR Questions for HR Assessments
• How to Prepare for an HR Assessment: Tools, Resources, and Next Steps

An organization’s HR practices have a significant impact on its health and continued growth. Businesses should evaluate everything from compliance to HR policies and practices, additional HR services needed, how HR fits into its broader strategic goals—and the importance of periodically conducting HR Assessments. A solid understanding of your HR practices and services will not only help you avoid potential liabilities but also help you manage your people resources more effectively.

What is an HR Assessment?

An HR Assessment is a comprehensive review and evaluation of the human resources services that are delivered to an organization. An HR Assessment:

• Provides a strategic and operational analysis of existing workplace policies, programs, and practices.
• Evaluates the compliance and effectiveness of those policies, programs, and practices.
• Evaluates the structures and competencies of an HR department’s workflow, roles, and responsibilities.
• Addresses the strengths and gaps in service and how those services align with the needs of the employees and the goals of the organization.
• Provides actionable recommendations for measurable change and best practices.

Compared to HR audits, HR Assessments are broader in scope. While audits focus on specific aspects of an organization’s HR operations to identify compliance issues and policy gaps that need addressing, Assessments look at all of your HR practices. These not only encompass compliance and liability concerns but also how well all the elements of your policies, programs, and practices work together to support organizational goals.

Why conduct an HR Assessment?

An HR Assessment can be a valuable way to determine whether HR needs are being met in an organization:

• Compliance with changing laws
  • An HR Assessment can uncover areas of noncompliance that if not identified and rectified can cost the organization money and impact its reputation.
  • Hiring and firing practices, recordkeeping, exempt and non-exempt employee status, salary and benefits practices, vacation policy, and safety are all areas of risk when it comes to compliance.
  • Keep in mind that small businesses may be more vulnerable if they have a non-HR employee managing HR rather than an experienced HR professional or team.
• Equitable and consistent policies and practices
  • Beyond complying with government-mandated policies, fair and consistent organization-driven HR policies and practices are important and can measurably increase morale, performance, and ultimately, employee satisfaction.
  • Conversely, policy inconsistencies can be interpreted by team members as inequitable, biased, and showing favoritism.
• Inventory of HR Programs
  • The importance of the quality of HR programs provided to an organization and supported by senior leadership cannot be stressed enough. An inventory of HR programs should include:
    • The recruitment, hiring, and onboarding process
    • Performance management
    • Employee development and training
    • Compliance and equity of salary and benefits programs
    • Diversity, equity, and inclusion for all existing and prospective employees
    • Communication tools
    • Employee access to information through up-to-date technology
  • Where these programs and practices exist, organizations will want to evaluate the quality of service. Where they do not exist, organizations will want to consider building out these programs with the understanding that they can impact employee satisfaction, engagement, and retention.
• HR skills, expertise, and resources
  • If there are gaps in service delivery, it may be a result of HR skill or competency deficiencies among team members that may require further education, reorganization, or possibly replacing staff.
  • It may also uncover a need for additional education, more resources, and a need to implement/upgrade HR-related technology.

Conducting an HR Assessment and making changes based on results and recommendations will create trust and confidence in the HR function and the organization’s commitment to improving its practices.

When should you conduct an HR Assessment?

There are multiple reasons and particular circumstances that can or should prompt an HR Assessment:

• A concern and desire to ensure that HR programs are meeting organizational needs and delivered efficiently and effectively
• Significant HR regulatory changes that impact or are impacting policies and practices
• The number of employees or growth in the business passes a certain threshold, and there is concern about the knowledge base/experience and overextending existing staff
• A change in leadership or organizational structure
• Due diligence after a merger or acquisition

That said, an organization doesn’t need to wait for these or any other developments to perform an HR Assessment or an HR audit. Best practice would be for an organization to conduct an HR Audit every few years to ensure they are maintaining compliance, have policies in place, and are applying them consistently.

We strongly recommend conducting a full HR Assessment every few years to evaluate HR policies and best practices and to ensure that programs support organizational goals, employee satisfaction and productivity, and create a stronger and healthier culture.

Who should conduct your HR Assessment?

An HR Assessment signals to employees that your organization takes its HR function and the impact on employees seriously.

We recommend that you commit adequate resources and expertise—whether through an internal team or by hiring an HR expert that will be able to generate measurable results and provide actionable recommendations. Consider that an outside HR consultant will be more experienced, generally more objective, and able to bring the greatest value to an organization.

15 Key HR Assessment Questions

An effective HR Assessment will cover a lot of ground, so it can be helpful to review some of the key questions that it will seek to answer:

These are just a few of the questions that an HR Assessment will cover, and the exact scope of your own will vary based on the unique context of your business and your goals. However, these examples cover many of the essential categories to be kept in mind: compliance, employment policies, record-keeping, safety, performance management, alignment of HR with business strategy, and more.

How to Prepare for an HR Assessment: Tools, Resources, and Next Steps

To get started, determine your organization’s need for an HR Assessment. Refer back to the “When should you conduct an HR Assessment?” section above, and then try answering these questions:

• How long ago was your last comprehensive HR Assessment?
• How recently have you audited specific elements of your HR practices?
• Are you encountering any chronic HR issues or growing pains? Are there specific gaps or problems that you want to analyze?
• Do you understand how the separate elements of your HR practices fit into the bigger picture and support your organization’s goals?
• How do employees feel about your current HR practices?

These questions can get the ball rolling for defining your exact needs and goals. From there, start to weigh your options. HR Assessments can be conducted internally, but you must have a well-prepared HR team ready to handle the process objectively.

To prepare for or conduct an HR Assessment, the CEO or Executive Director will want to communicate with your employees and share that an HR Assessment will be conducted, and ask for full cooperation. In addition, you will want to be prepared with the right resources and information needed for the Assessment, including:

• The opportunity to survey employees or a subset of employees to gather anonymous information
• Access to interview stakeholders at different levels of the organization and outside HR-related vendors, as needed
• Access to interview the HR person or HR team
• The employee handbook, if one exists
• All documented employee policies and practices
• Employee records, either paper or digital
• Up-to-date job descriptions for each position
• Access to relevant HR software
• Open lines of communication between HR and other departments

While this is not an exhaustive list, it does reflect the importance of taking an organized approach to HR. Clear records, organized systems for generating and storing them, and clearly defined roles and departmental contacts will drastically simplify the process of conducting an HR Assessment when the need arises.

If your HR team is not prepared to conduct an Assessment on their own, or if this will be your organization’s first Assessment, partnering with an HR expert will be the more effective solution.

RealHR Solutions is a leading provider of HR Assessment services for organizations of all sizes. If you have questions about HR Assessments or want to discuss your needs, please contact us to learn more. We can offer our expertise and point you in the right direction for next steps. To keep learning about the importance of solid HR practices, explore these additional resources:

• Performance Reviews: Overview & Tips from HR Experts. Performance management is a key area that you should seek to analyze in an HR Assessment. Make sure your current approach is rooted in best practices with this guide.
• Response to the Great Resignation. The impacts of the COVID-19 pandemic on the labor market have been profound. If employee retention and engagement have been challenges for your organization, explore our thoughts on this trend.
• What, Why, When, and How to Conduct a Pay Equity Audit. Compensation is a critically important aspect of an organization’s strategies and relationships with employees. Unsure if you need a pay equity audit? Check out this crash course.